Geographic Variances in Medicaid Spending – And the Winner Is?

When Health Affairsreleased a first-ever study of geographic variances in Medicaid spending on July 7th, it was a new twist on transparency that is just the beginning of what will become a detail-by-detail exposé of care and treatment of patients in the United States. Just imagine a few years from now, when every record is electronic and every detail will be instantly available to the government. Like this variance report, we will begin to see the good, the bad and the ugly of how medicine is practiced in this country. So… how do you spell transparency?

A few weeks ago, the New York Times ran an article in which the “overuse of Medicare-funded CT scans” was explored. Featured in the digital version of this article was an interactive map showing virtually every hospital in the United States, and as the mouse was passed over each hospital, the percentage of inappropriate CT scans appeared above the facility’s name. If yours was one of the hospitals that was 80+ percent over using this device in multiple single-day scans, you were, as they say, “busted.”

Well, this release exposed at least one entire section of the country that is overusing Medicaid on numerous levels. Although the study revealed a wide variance in per-beneficiary spending, one geographic region outshined them all. The findings showed that after adjusting for the case-mix of patients, variations are driven mostly by volume of services provided and, to a lesser degree, by price. Per-beneficiary spending in the ten highest states was $1,650 above the national average, mostly caused by the greater number of services provided.

One of the most significant findings revealed by this study was that the supply of primary care physicians in specific areas was associated with reduced rates of admissions for diabetes, lung disease, and adult asthma. The authors suggest that this finding might point to the fact that increased access to primary care providers may result in improved management of common chronic diseases for people on Medicaid.

So, by now you’re asking, “Who won? Who used more money per capita to treat Medicaid patients?” It was The Mid-Atlantic States: New Jersey, New York and Pennsylvania used more Medicaid funds per capita than any of the regions in the United States. For example, the per beneficiary cost in New York was twice that of California; $21,195 for New York vs. $11,200 for California.

As a region, New England used the least amount of Medicaid resources and as a state, Washington provided the best example of “how things should be.” How did they do it? They increased access to primary care and reduced hospital care.

Todd P. Gilmer, Ph.D. - UCSD

Finally, places that had higher numbers of hospital beds and specialists were associated with higher numbers of hospital admissions while higher numbers of primary care physicians were associated with reduced rates of hospital admissions…Todd P. Gilmer, PhD, professor of health economics in the Department of Family and Preventive Medicine at the University of California – San Diego said, “By looking at service mix, access and price, states can find ways to make their programs work better.”

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F. Nicholas “Nick” Jacobs, FACHE, is the international director for SunStone Consulting, LLC. In that capacity he provides transformative, strategic solutions to companies, organizations and individuals. He has more than 20 years experience in hospital management, with an acknowledged reputation for innovation and consumer-centered leadership.
Throughout his career, Mr. Jacobs has developed a reputation for innovative leadership that focuses on effective delivery of service that puts the patient’s needs and concerns first. He speaks extensively on this topic and has spoken for the American College of Healthcare Executives, American Hospital Association, and the World Health Organization numerous times.